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How much does a home cost in your neck of the woods?
That may seem like a simple question, but a similar one tripped up all but one of the Democratic candidates running for mayor in New York City.
On Tuesday, the New York Times published a series of interviews its editorial board conducted with each of the candidates. The interviews were conducted as part of the paper’s endorsement process — the Times ended up endorsing Kathryn Garcia, the former commissioner of New York’s sanitation department.
One of the questions posed by Mara Gay, a member of the paper’s editorial board and an MSNBC analyst: What is the median sales price of a home or apartment in Brooklyn?
The correct answer, according to Gay, was $900,000. Among the candidates, only Andrew Yang answered correctly — though only after doing some deliberation with himself. Garcia came close, guessing $800,000, as did New York City comptroller Scott Stringer who said $1 million.
Some of the answers were rather far off. Former Citigroup
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executive Ray McGuire guessed between $80,000 and $90,000. Shaun Donovan, who served as Secretary of Housing and Urban Development under President Obama, said $100,000, though he later clarified that his response was referring to the assessed value of homes in Brooklyn. “I really don’t think you can buy a house in Brooklyn today for that little,” he told the Times in an email.
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While people likely know the price in their neighborhood, they’re probably less familiar with home prices in other parts of town unless they’re actively searching for a home in those areas.
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“Shaun misinterpreted the question and made a mistake,” Jeremy Edwards, Donovan’s press secretary, told MarketWatch. “He had been volunteering on a complex housing assessment lawsuit and just got the numbers mixed up.”
In a statement, McGuire said he “messed up.” “Make no mistake, I care deeply about our city’s affordable housing crisis. I know what it’s like not being able to afford a home because it was my own experience,” he said.
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Currently, there are only two listings in the entire of New York City where the asking price for a home was $100,000.
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Currently, there are only two listings in the entire city where the asking price was $100,000, according to real-estate website and Zillow
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subsidiary Streeteasy . One was a studio apartment in the Bronx, while the other was a one-bedroom unit in Queens.
The interviews highlighted how people are generally most familiar with real estate in their neighborhood, said Danielle Hale, chief economist at Realtor.com. “So while people likely know the price in their neighborhood, they’re probably less familiar with home prices in other parts of town unless they’re actively searching for a home in those areas,” she said.
That could explain why some candidates — Stringer and former mayoral counsel Maya Wiley — gave responses that were higher than the actual price. Most of the candidates were also better able to judge how much it costs to rent in Manhattan — a reflection of how most of the city’s residents are renters rather than homeowners.
How well do you know how much homes cost across the country? Take this quiz to find out
In general, Americans are not particularly adept at assessing the cost of real estate. When asked to say what the median value of a home was nationwide, only around 16% of Americans responded correctly, according to the results of a 2019 survey from personal-finance website GoBankingRates.
And past research from Quicken Loans
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shows that homeowners’ perceptions of home values typically differ from the valued determined by appraisers.
Over the past year, it’s likely gotten even more challenging to assess the value of a home for most people. Home prices are rising quickly in virtually every part of the country. In the first quarter of 2021, home prices increased on an annual basis across 99% of the metro areas that the National Association of Realtors tracks, the trade organization reported on Tuesday.
“The sudden price appreciation is impacting affordability, especially among first-time home buyers,” Yun said in the report, adding that “skyrocketing costs have left many families facing the reality of being priced out entirely.”
Big or small, most markets are seeing record-high home prices right now, according to Lawrence Yun, chief economist at the National Association of Realtors. That’s because of the imbalance between demand and supply.
The pandemic prompted many people to decide to move, which increased the number of home buyers in the market. On top of that, millennials are reaching the phase in life where homeownership becomes particularly attractive as they get married and have kids.
Home supply has not kept pace. For years, home builders were constructing new properties at a very slow rate — a reflection of the negative effects the Great Recession had on the industry. That’s left the country with shortage of millions of homes, causing prices to rise quickly for the properties that are on the market.
